Boris Johnson has lost his battle to prevent the £1bn Crossrail carriage contract being funded through a private finance initiative, in a development that could affect the long-term future of Britain's last remaining train factory.

The London mayor's request to pay for the 60 trains by raising the debt ceiling at his Transport for London authority and acquiring them directly has been refused by the transport secretary, Justine Greening. It is understood the contract could still include an element of public financing – about 30% – although the majority will be PFI-backed.

The 1,200 Thameslink carriages will be financed by a Siemens-led consortium that will put equity into a specially created business and then raise the debt to pay for manufacturing the trains. Those trains will then be leased back to the train operator, which will pay a regular fee to Siemens and its partners.

Tony Travers, director of the Greater London group at the London School of Economics, said: "By insisting on a PFI the government risks loading the dice against UK manufacturing." It is thought that Siemens' superior financial firepower was a significant factor in it beating Canada's Bombardier to preferred bidder status on Thameslink. As a consequence of losing out to Siemens, Bombardier has said it will have to cut 1,400 jobs at Derby.

In a bid to sway the DfT and Treasury in its argument for a state-financed deal, TfL drafted a memo in which it labelled PFI deals as "complicated and expensive."

The memo added that the banking crisis had increased the financial cost of privately-backed PFI deals. It said: "The financial crisis has resulted in a significant widening of the gap between the cost of finance under a private-financed concession compared with the public sector."

The memo cited a critical Treasury select committee report that found PFIs can add up to 70% to the cost of a project. Because TfL shares the government's AAA credit rating, it can raise debt more cheaply than under the PFI scenario. However, TfL is not allowed to increase its borrowings, currently at £6.4bn, by more than £1.9bn over the next four years and it is understood that financing the Crossrail carriages on its own would breach that guideline.

A Department for Transport spokesperson said the Crossrail bid criteria made clear that "options for financing Crossrail rolling stock include private debt." He said: "The secretary of state has been carefully considering all options to ensure the best value for money and full details will be published in an 'invitation to tender' early in the New Year."